It's raining news on Enemalta. The corporation seems unable to get out of the headlines, and for multiple reasons. The easier one first. Enemalta's chairman is under political fire, boosted by some sceptical newspapers, because of a conflict of interest in respect of a tender regarding which a company he is personally associated with will be involved.
To my mind the issue is a non-issue. The point in such matters is whether, when a director finds himself in a conflict-of-interest situation, he declares it and steps out of the loop. That practice exists both for propriety's sake and also because, in a small country like Malta, inevitable conflicting overlaps would preclude most individuals from accepting public positions.
In this case the chairman stated that he declared the conflict of interest from the outset and stepped out of the reckoning on the aspect of the contract in question. That statement has not been challenged. Anyone in such a position can do no more than that.
More serious is an allegation, relentlessly pressed by Labour MP Evarist Bartolo, that a local businessman was active to promote the interests of a particular bidder for the power station contract in question and wrote words regarding political connections which appear, whatever the minister responsible for Enemalta and its chairman say, damning.
The more Minister Austin Gatt and chairman Alex Tranter protest that it was all done in the normal course of events, but avoid pinning down and explaining the political reference, the more they allow suspicion to take root. It is not a question of the Hon. Bartolo or competitor bidders referring the matter to the police. There should be an independent investigation ordered by the Prime Minister parallelled by a thorough examination by the public auditor. Otherwise the issue should and will stay in the headlines.
In the headlines too is the financial state of affairs of the corporation. Now that the backlog of annual audited accounts which mysteriously built up has been revealed, and the estimates for 2009 were published and discussed, it is clear that Enemalta is in a parlous state. It is subsisting with the aid of heavy bank finance which would probably be denied to a private economic operator in the same dire situation. The reason that the banks continue to make credit available is spelled out in a government guarantee.
That sovereign security makes up for the corporation's inability to enter into a realistic agreement to gradually repay the banks through a sustainable programme. To do that it requires a steady cash surplus, which is nowhere in sight. In fact the entity's financial situation has been getting worse.
Minister Gatt has explained why, in the process justifying Enemalta staying in the news on this account as well and facing a multitude of questions. The corporation, it turns out, did not recover from the public the true cost of its fuel input when the basic crude oil price soared to its record high, $147 a barrel. Why? Because, if I understood the minister correctly, the corporation changed the basis of its pricing from one calculated to recover actual cost of fuel purchases, to one based on the price of its fuel input in the futures market.
The changeover, says the minister, left a hefty uncovered gap the cost of which was borne by the government and Enemalta itself. Question: did the changeover mean that the Roderick Chalmers recommendations, which had been accepted, have been ditched? If so, why? Personally, I see merit in pricing based on futures, assuming buying is taking place along their curve. But, if Mr Chalmers was bypassed after being publicly accepted, the public deserves to be told so, and why.
Enemalta also remains in the news because of its tariffs, and because the price of fuel for vehicles has recently been raised by approximately 15 per cent. Various observers say that the tariff levels and fuel rise are out of synch with what is happening elsewhere. Are they? And if they are, why?
Whatever the levels, so long as the long arm of the governments sets them they will always be challenged. I believe it is more than time for the sector to be well and truly detached from the government. It should be heaved into a competitive environment where competing suppliers source and supply our fuel. Enemalta will probably continue to source its own requirements, but through real competition we would be able to gauge whether it is being efficient or not in its procurement.
Competition should be overseen by a regulator with some serious stuff where it matters in his/her anatomy. If this change were to come about, it would make the best headline of all. Consumers would have to begin to see fuel like any other commodity subject to market forces, and the government would be detached from it all, remaining in the game only to assist social cases under a suitable and fully transparent system.